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Can Chapter 7 bankruptcy address growing consumer debt?

Borrowing money is not necessarily a bad thing. From taking out mortgages to buy homes or auto loans for vehicles, borrowing can often feel like a necessary part of moving forward in life. However, for some people in California, what might have felt like relatively safe approaches to borrowing can quickly spiral out of control. In such instances, Chapter 7 bankruptcy can be a viable option for debt relief..

Americans in general seem to be more confident when it comes to borrowing. Unemployment rates are relatively low and the economy is doing well, so taking on additional debts can feel like a safe move. However, all of that borrowing has led to $13.3 trillion in consumer debt nationwide.

Mortgages take up the greatest share of that debt, coming in at $9.4 trillion. While there is often a lot of emphasis on how much credit card debt the average person has, this category does not come second or even third in consumer debt. Credit cards account for $834 billion of the consumer debt, coming in at the fourth most common. Student loans are actually the second largest chunk and account for $1,363 billion.

The breakdown of consumer debt shows that mortgages, student loans and auto loans comprise the majority of debts. While most people in California approach these types of debts cautiously, the future is unpredictable, and what might have been a good idea at one point is suddenly impossible to handle. Whether dealing with consumer debt, medical debt or financial issues, Chapter 7 bankruptcy can help people address their overwhelming debts and get them back on the road to financial security.

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